adminstatement, Finance Minister Tendai Biti said the Government has since established a special task force for a comprehensive review of the labour legislation “with a view of making it flexible and consistent with business realities”.
The anticipated review will likely focus on issues regarding reviewing of retrenchment procedures (including the role of the arbitrator), maintaining the balance between protecting the worker and ensuring business viability, and guaranteeing that retrenchment packages are awarded in tandem with enterprises’ capacity to pay.
Labour market experts in the country believe that the economy is characterised by substantial labour market rigidities.
“What we have is a sclerotic labour market, unable to shed or reconfigure labour requirements in response to changing product demand conditions. Companies are unable to rightsize their operations due to legal rigidities.
“This means companies will not readily hire new labour if they face difficulties offloading excess labour. New labour hiring can only be increased if comprehensive labour market reforms are instituted to give latitude for flexible hiring of labour,” said one analyst.
Legal rigidities in Zimbabwe’s labour market has resulted in companies failing to rightsize their operations, and avoid hiring new labour, fearing difficulties in offloading when business decreases.
The Confederation of Zimbabwe Industries has noted some of the negative consequences of the inflexibility of the labour market.
“The cost of labour is greatly impacting on the cost of production. From the survey, wages and salaries as a percentage of total expenses ranges from 12 percent to as high as 60 percent.
“In an economy where inflation levels are averaging 4 percent, the continued awarding of salary and wage adjustments in excess of 20 percent is only serving to render business unviable in the medium to long run,” said CZI.
Industry concerns largely stem from wage demands divorced from productivity by workers unions, arbitration awards that fail to take account of affordability at company levels, resulting in uncompetitiveness of local industries in export markets.
There has, however, been poor consensus building on improving the labour environment by both employers’ associations and the labour unions.
Earlier this year, local industry dismissed proposed amendments to the country’s Labour Act, branding them as “employee-biased”. Industry was responding to a draft paper released by the Labour
Reform Secretariat on the proposed amendments to the country’s Labour Act. However, Zimbabwe’s labour market challenges extend beyond matters of legislation.
The World Economic Forum Global Competitiveness Report 2011 has also shown that the country’s labour environment suffers from a range of issues that are having a negative effect on market efficiency.
It indicates eight poor rankings out of nine in respect of key labour market fundamentals namely co-operation on labour relations, flexibility of wage determination, rigidity of employment index, hiring and firing practices, brain drain, redundancy costs, pay and productivity, and females in labour force.
Economists believe that inefficient labour market fundamentals tend to be inextricably tied to the performance of the general economy; hence the above may help to explain the fragile nature of Zimbabwe’s current economic recovery.
On the other hand, it may be postulated that the challenges facing the local labour market could have emerged from the depressed state of the economy.
That is, as a result of dollarisation most companies’ balance sheets were wiped out. In view of the overarching economic constraints firms in the productive sectors have found it prudent to deflate by squeezing costs – which means, simultaneously, lower wages and fewer jobs – resulting in an excessive number of wages disputes.
Online Reporter